‘We hereby undertake to compensate you with the difference between the$355 and the final price of this quantity.’
‘We, the undersigned INTERNATIONAL OIL MULTISEED EXTRACTION CO. herewith assign to AMS AMEROPA MARKETING AND SALES AG, all rights pertaining to us in connection with the above-referenced shipment. In particular we assign all rights to AMS AMEROPA MARKETING AND SALES AG to recover the loss suffered from the liable parties and in particular against the owner of the vessel m/v "DORIC VALOUR".’
‘11. The general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimant’s loss. It is difficult to identify a single principle underlying every case. In spite of what the Latin tag might lead one to expect, the critical factor is not the source of the benefit in a third party but its character. Broadly speaking, collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus a gift received by the claimant, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them. The same is true of a benefit received by right from a third party in respect of the loss, but for which the claimant has given a consideration independent of the legal relationship with the defendant from which the loss arose. Classic cases include loss payments under an indemnity insurance: Bradburn v Great Western Railway Co (1874-5) LR 10 Ex 1. Or disability pensions under a contributory scheme: Parry v Cleaver[1970] AC 1 . In cases such as these, as between the claimant and the wrongdoer, the law treats the receipt of the benefit as tantamount to the claimant making good the loss from his own resources, because they are attributable to his premiums, his contributions or his work. The position may be different if the benefits are not collateral because they are derived from a contract (say, an insurance policy) made for the benefit of the wrongdoer: Arab Bank Plc v John D Wood Commercial Ltd[2000] 1 WLR 857 (CA), at paras 92-93 (Mance LJ). Or because the benefit is derived from steps taken by the Claimant in consequence of the breach, which mitigated his loss: British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Ltd[1912] AC 673 , 689, 691 (Viscount Haldane LC). These principles represent a coherent approach to avoided loss. In Parry v Cleaver[1970] AC 1 , 13, Lord Reid derived them from considerations of ‘justice, reasonableness and public policy’
‘52. There is a danger in picking out isolated sentences from this passage, as both counsel sought to do to some extent in argument before us. What emerges clearly, however, is the principle that collateral benefits (res inter alios acta) must be treated as not making good the claimant’s loss, and that there is no single principle underlying every case. The broad principle (“Broadly speaking …”) is that collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss, and the critical factor is the character of the benefit, but these are criteria which will sometimes be easier to state than to apply to the facts of any particular case.’
‘In this case I understand what happened was this. After the contract was made, by which Messrs. Paul bought from Messrs. Broster, Messrs. Paul’s representative went to the bank, paid the price and the freight, and obtained the bills of lading which had already been indorsed, and they obtained possession thereby of the cargo; when it was taken out of the ship it was theirs; it was taken out on their account as purchasers of the cargo. When this damage was found, surveys were held and so forth, samples were taken, and an arbitration was held between Messrs. Paul and Messrs. Broster under the terms of the contract which I have just read, and it resulted in Messrs. Broster having to pay a sum of money to Messrs. Paul, and it is agreed here, and admitted by Mr Mocatta It seems likely that this was a slip by Mr Justice Goddard and that he intended to refer to Mr Miller, counsel for the bill of lading holder. Mr Mocatta was counsel for the shipowner. , that if they recover damages in this case, they are trustees of those damages for Messrs. Broster, who have already paid them. In the view I take of this case, I do not think that that matter affects the plaintiffs’ right to sue at all; if they have a right to sue the ship, what they have to do with the damages by reason of some other transaction they may have entered into does not seem to me to affect the case at all.’
‘… I cannot understand how it is said that the property in these goods which were delivered, which Messrs. Paul paid for and obtained by reason of being the holders of the bill of lading – the absolute and complete property – did not pass to Messrs. Paul by the endorsement of the bill of lading, as I think it did, then the absolute property is transferred by virtue of the Bills of Lading Act and all the remedies in respect of that property, remedies against the shipowner in respect of that property, give them a right to sue for damages. In this respect, I do not think that Mr Mocatta has seriously contended that the fact that Messrs. Paul had been compensated by Messrs. Broster, who were merely intermediate purchasers, really affected the question at all; it would only affect the ultimate destination of the damages because I have no doubt that Messrs. Paul will have to account to Messrs. Broster. Under those circumstances, it seems to me it is enough to say that in my judgment Messrs. Paul had a title to sue for damages in this case by virtue of the Bills of Lading Act. Also, it seems to me that they must have a right to sue by virtue of the implied contract following on the decision in Brandt’s case, they being the people who, it is conceded, paid the shipowner, and took delivery from the shipowner.’
‘The arbitration brought by the claimants continued and resulted in an award in their favour. Before the arbitrators it was argued by the carriers that the claimants could only recover nominal damages. It was admitted that the claimants had the property in the damaged goods at the material times but it was argued that they had suffered no recoverable loss because they had been able to collect the price for the goods from the end users. This surprising contention was rejected by the arbitrators but was persisted in by the carriers on appeal to this court and has been re-argued before me. The argument is patently unsustainable and I did not feel it necessary to call upon the claimants’
‘Similar decisions are collected at art. 194 of Scrutton on Charterparties. See now Article 213 of the 25th Edition (2024). The fact that the claimant or plaintiff has contracts of sale or purchase which enable him to collect the price from his buyer or obtain reimbursement of the price or other compensation from a seller do not disentitle him from recovering full damages. Full damages assessed by reference to the sound arrived value of the goods are not affected by the fact that the owner of the goods has sold them on at a higher or lower price. … Yet another aspect of the law with which the novel and erroneous proposition of the carriers before me comes into conflict is the established law about remoteness of damage and mitigation in relation to maritime contracts. As will be apparent from the article in Scrutton to which I have already referred and the cases there cited, the provisions of contracts of sale and purchase to which the goods owner is a party are, in the absence of special circumstances, res inter alios acta which are not taken into account in assessing the damages to be paid to the goods owner. (Of course, at an earlier stage, when the plaintiff is seeking to establish his title to sue he does need to establish his ownership of the goods and this may involve an examination of the contracts of sale and purchase to which he was a party.) In the present case, if the claimants had chosen to release the end users from their contracts of purchase and had chosen to deal direct with the cargo insurers, the carriers could not have complained. Similarly, whether the end users were solvent or insolvent would be equally irrelevant. The carriers of goods are not concerned, in the absence of special circumstances, with rights of indemnity or rights to recover or recoup the price, or rights to damages as between goods owners and mercantile parties with whom they may be in contractual relations. Such considerations are too remote.’
‘28. There was consideration in R&W Paul of when and how the plaintiff acquired property in the cargo, because that was part of establishing title to sue in contract as bill of lading indorsee under the 1855 Act. That is not an enquiry required by COGSA 1992 as part of proving title to sue. But there was no consideration of whether that meant the plaintiff owned the cargo when it suffered damage. The basis of the decision in R&W Paul as to full damages is not that the plaintiff owned the cargo when it suffered damage. It is, rather, that the plaintiff came to own, and took from the ship, damaged cargo, because of the defendant shipowner’s breach of the bill of lading contract, and that was sufficient in law for full damages. Exactly as Mr Thomas QC put it, the plaintiff bill of lading holder suing on the bill of lading in contract was entitled to full damages despite an earlier recovery from an intermediate seller.’
‘30. In my view, the decision in R&W Paul was not confined by The Sanix Ace to a case where the claimant was the owner of the cargo (or entitled to possession) when it suffered damage. The Sanix Ace was such a case. That mattered on the facts because in that case a voyage charterer claimed full damages under the voyage charter although (a) it was not the receiver or end purchaser of the cargo and (b) it had been paid in full by the receivers and end purchasers to whom it had sold the cargo. Those receivers had to pay in full despite the damage because the sale contracts passed the risk of cargo damage to them as from shipment, but passed property to them only after the cargo had been damaged. Hobhouse J upheld an award of full damages in arbitration because even though the claimant charterer did not feel loss by receiving damaged rather than sound goods, it had owned the cargo when it suffered damage and that sufficed.’
‘33. … Assuming title to sue in contract, the carrier is liable to full damages if sued by the receiver who, by reason of the carrier’s breach, receives damaged rather than sound goods (R&W Paul) or if sued by a claimant who did not receive the damaged goods but who owned the goods when they were damaged by the carrier’s breach (The Sanix Ace), in each case irrespective of how financial loss reflecting or resulting from the cargo damage is or comes to be distributed across the sale of goods chain (ibid). The former sues as the owner of the damaged goods since but for the breach he would have been the owner of undamaged goods; the latter sues as the owner whose sound goods were damaged. In either case, it is the property in the goods that carries the right to recover full damages (to echo Hobhouse J at 468 rhc) – the receiver’s property in damaged goods that he should have received undamaged, the Sanix Ace claimant’s property in the undamaged goods when they were damaged.’